Could Italy collapse the euro?

Danzy

What will collapse the Euro, or at least contribute to its ongoing risk, is that they never built the structure to back it.

They'll need a transfer Union first and foremost, no currency has ever survived long term without one, a significant enough one, there is the bare bones of it there but it will have to be much bigger.

Common bonds as part of the mix, they do not have to be the only bonds or the majority.

Stronger fiscal oversight at the top, a proper Federal treasury and budget.

Just for starters.

Will even one country agree to all of that.

Germany will not, not even close, nor will the Dutch, can't see the Austrians or the Finns either. Nevermind ourselves, Italy, Spain etc.

Even the most basic things for the longterm survival or stability of a currency are off the table, even for discussion, among its most powerful members.

While the currency has been a disaster for jobs and growth overall, it exists and making it not exist would be a crisis that would make 2008 look like a slowdown.

In about 2003, the Eurozone was about the same size GDP wise as the US economy, it is now about 40% smaller.

The last 15 years have not been a success, even if it feels different. Some countries have benefitted but more have not.

Danzy

Kermit.de.frog wrote: »

Yes but extremely difficult to contain the fallout from any member leaving.

Not saying it is not possible but it would mean a lot of pain especially for weaker members.

If one of the largest economies in the world leaves the Euro it will not survive as a currency, nor would I suspect the EU survive.

Could the World economy handle an Italian default is a valid question as well.

For most of the 60 to the early 90s, Italy outperformed Germany on many key economic metrics. An often forgotten point.

McGiver

Danzy wrote:

For most of the 60 to the early 90s, Italy outperformed Germany on many key economic metrics. An often forgotten point.

Yes but you forgot to add how. By constant borrowing and devaluation of the currency. Instead of increasing competitiveness via automation, research and development, education, efficiency of public administration etc. All that growth was made at a huge price. Euro just exposed the hidden problem.

McGiver

Danzy wrote:

While the currency has been a disaster for jobs and growth overall, it exists and making it not exist would be a crisis that would make 2008 look like a slowdown.

It's the second largest reserve currency globally and is almost reaching a dollar in that matter. And that was achieved in less than 20 years without a single shot. Unlike in the case of the USD and GBP reserve currency status.

The US and Russians are paying bots and trolls to make people believe posts like yours to undermine the EU and the Euro and eventually destroy it.

The structural problems you mentioned do exist but it's not so alarming as you say.

I repeat, Italy has never run balanced budget or had government debt less than 60% of GDP in its 170 years history. The issue is Italy not the Euro.

Kermit.de.frog

Italy’s Debt Rating Is Cut to One Level Above Junk